Financial Energy Review
The Nigerian National Petroleum Company (NNPC) Limited has remitted a total of N511.66 Billion out of the expected N2.09 Trillion into the federation account which is about 25 Percent of expected revenue in 10 months.
An analysis of the figures showed that for the period under review, the sum of N1.581 trillion was recorded as variance between the budgeted amount and actual sum remitted by the company.
The data was part of the national oil company’s November presentation to the Federation Account Allocation Committee (FAAC).
The section of the document tagged, “2021 Monthly Actual NNPC Oil and Gas Revenue and Distribution to FAAC”, indicated that for the entire year, NNPC had projected a total of N2.511 trillion as payment to the three tiers of government. That forecast was largely a mirage, given the severe shortfall posted between January and October.
Whereas the company was supposed to pay N209.30 billion every month into the federation account, the report, which covers its October operations, showed that a paltry N14.85 billion was remitted, representing the least so far released throughout the whole year, apart from April when it remitted nothing.
It wasn’t clear how the authorities augmented the shortfall last month, but in November the three tiers of government shared N671.910 billion as FAAC revenue for the month of October, as against N739 billion the previous month.
However, a release from the Federal Ministry of Finance stated that the amount was inclusive of Value Added Tax (VAT), “augmentations,” exchange gain, and non-oil mineral revenue.
In the month also, the federal government received N284.292 billion, states got N209.838 billion, while the 774 local governments received N156.282 billion.
Oil-producing states received N21.498 billion as 13 per cent derivation of mineral revenues, according to the communiqué released at the end of the meeting.
Under the current sharing arrangement, the federal government takes 52.68 per cent of the revenue shared, states get 26.72 per cent, while the local governments get 20.60 per cent.
Recently, Ekiti State Governor Kayode Fayemi, who is also Chairman of the Nigeria Governors Forum (NGF), lamented that the NNPC had literally not remitted funds into the FAAC in the last four months.
Fayemi added that the failure of the NNPC to remit funds into the federation account was responsible for the decision of his administration, for instance, to slash the subvention of Ekiti State University (EKSU).
A review of the figures released by the NNPC during the November FAAC presentation showed that between January and October, the company was barely able to meet a third of its obligation to the federation.
In January, the national oil company paid N90.8 billion of the N209.3 billion projection; in February it remitted N64.16 billion and in March, the NNPC paid N41.1 billion into the federation account.
But in April, it paid nothing to the three tiers of government; in May it was N38.608 billion; in June it paid N47.16 billion while in July it remitted N67.2 billion.
Things appeared better in August, when NNPC remitted N80 billion to the joint account, but it fell again to N67.533 billion in September, before slumping to N14.85 billion in October.
Although the mandatory cuts imposed by the Organisation of Petroleum Exporting Countries (OPEC) last year initially played a role in the inability of NNPC to meet its obligation to the federation, ageing upstream infrastructure, oil theft and outright sabotage have combined to hobble the country’s oil production.
Nigeria has been unable to meet even the tapered production quota allocated to it by OPEC, thereby further reducing its total crude oil export, coupled with the subsidy payment, which continues to eat deep into the national oil company’s resources.
NNPC will again make a deduction of roughly N200 billion from the joint federal, state and local government account when the FAAC meets later this month to share the statutory monthly allocation.
Analysis of the document detailing the presentation of the national oil company to FAAC in November, indicated that the N200 billion will be the highest amount deducted by NNPC since it resumed payment of petroleum subsidies in February this year.
In all, it further showed that NNPC has removed at least N1.027 trillion from monies accruing to the three tiers of government in the country between February and October as payment for the controversial petrol under-recovery.
A breakdown of the various deductions indicated that payments have increased progressively, growing from N24.3 billion in February, to N60.3 billion in March and N61.9 billion in April this year.
